Federal judge dismisses HBPA lawsuit challenging of Horseracing Integrity and Safety Act

A federal judge in Texas has dismissed a lawsuit brought by horsemen’s groups challenging the constitutionality of the Horseracing Integrity and Safety Act, ruling that the legislation “stays within current constitutional limitations” as defined by previous courts.

The ruling by Judge James Wesley Hendrix of the U.S. District Court for the Northern District of Texas hewed closely to an analysis of the act’s constitutionality by supporters of HISA, which included The Jockey Club. Citing several precedents in the Supreme Court and U.S. Fifth Circuit, Hendrix ruled that the legislation did not violate the so-called “nondelegation” doctrine of the U.S. Constitution by giving the Federal Trade Commission final say over rules that will be applied to horse racing operations across the United States.

“Though the Fifth Circuit has not yet confronted a scheme like HISA, its precedents on the private nondelegation doctrine indicate that Congress has not given away its legislative power under Article I nor violated due process because the authority does not possess unrestrained and unreviewable power to regulate,” Hendrix wrote. “Rather, legislative standards guide the authority and the FTC, and the FTC controls the promulgation of binding rules. Thus, HISA’s rulemaking mechanism does not violate the private nondelegation doctrine.”

The National Horsemen’s Benevolent and Protective Association, along with a dozen of its state affiliates, brought the lawsuit challenging HISA. The organizations were represented by the Liberty Justice Center, which describes itself as working to “stake out Americans’ constitutional rights.”

Eric Hamelback, the chief executive officer of the National HBPA, said Friday morning that he is “fully confident” that the ruling will be appealed.

Daniel Suhr, managing attorney of the Liberty Justice Center, indicated in a statement distributed by the HBPA that the group planned to pursue the case despite the ruling.

“We are encouraged that Judge Hendrix recognized the strength of our arguments and plan to push them vigorously on appeal,” Suhr said. “Congress cannot cede its legal authority to regulate an entire industry to a private organization. This case remains important to protect the integrity of not only the horse racing industry but also our Constitution.”

The Jockey Club had predicted that the constitutionality of the act would be upheld, relying on an analysis of the act’s legal foundation that it funded prior to the legislation passing.

“For those long supporting the passage and implementation of the act, this is a result we have long anticipated,” said James Gagliano, the chief operating officer of The Jockey Club, in a statement released on Friday morning. “We look forward to HISA beginning the first prong of its programs to enhance our sport.”

The legislation also is being challenged in a separate court, the U.S. District Court for the Eastern District of Kentucky, by a number of racing commissions, breed organizations, and private racing companies.

The core of the challenge to the legislation, which was passed late in 2020, involved whether Congress had granted too much power to the Horseracing Safety and Integrity Authority, a private, non-profit company sanctioned by the act. Supporters of the legislation had said that they had relied on previous acts of Congress to guide the establishment of the authority, such as the creation of several regulatory bodies governing financial markets and brokers.

Under HISA, the authority was given the power to draft rules in several areas of horse racing operations. Those rules were subject to approval by the FTC after a public-comment period. One month ago, the FTC gave approval to a sweeping batch of rules that are set to go into effect July 1, a date set in the legislation.

Hendrix acknowledged in his ruling that the legislation “creates a novel structure,” but he cited multiple decisions challenging the powers of similar agencies to find that the legislation “satisfies the current, low thresholds created by Supreme Court and Fifth Circuit precedent.” Hendrix said that the legislation clearly makes the authority “subordinate” to the FTC.

“Although the horsemen make compelling arguments that HISA goes too far, only appellate courts may expand or constrict their precedent,” Hendrix wrote. “This court cannot. And under current frameworks, HISA stays within constitutional boundaries.”

Hamelback pointed to the language Hendrix used to describe the “current, low thresholds” established by precedent as forming a basis for the appeal of the ruling, and he said that Hendrix’s acknowledgement that he cannot “expand or constrict” the precedents also made the ruling ripe for appeal.

Hendrix also shot down an argument by the horsemen that the authority would act in “self-interest,” pointing to the legislation’s requirements that its board and rule-making committees contain a majority of independent members.

“The court finds that the authority is not a self-interested industry competitor creating a due process violation under the horsemen’s alternate theory,” Hendrix wrote. “HISA explicitly protects against self-interest while preserving industry representation in the Authority.”